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Capital Planning in a Fluctuating Regulatory Environment

April 02, 2014

By THE GLOBAL BANKING AND PAYMENT SYSTEMS PRACTICE

Faced with substantial regulatory and business challenges on several fronts, U.S. bank holding companies (“BHCs”) and their subsidiary depository institutions continue to deal with significant uncertainty, including with respect to their capital requirements. Several important changes to how regulatory capital ratios are calculated, along with additional proposals that would substantially increase the required level and quality of capital for the largest BHCs, pose formidable challenges to capital planning for U.S. BHCs and their bank subsidiaries. In the face of this regulatory uncertainty, institutions are focusing on ensuring a flexible and responsive internal capital planning process that enables management to effectively deploy and supplement existing capital without having to alter substantially their existing business model.